CONTRACTS — formation — intention to create legal relations — alleged oral agreement — whether consensus reached capable of forming a binding contract
CONTRACTS — existence of contract where plaintiff alleged binding agreement arising out of mediation — whether concluded agreement in the form of Heads of Agreement drafted by solicitor for the Plaintiff
CONTRACTS — breach of contract — whether loss and damage established by the Plaintiff
LIMITATION OF ACTIONS — whether claim in contract statute barred — Limitation Act 1969 (NSW), s 14
Quick Take
1A party relying on spoken words as the foundation of a contract must prove the conversation to the court's actual persuasion, and must show that any consensus reached was capable of forming a binding contract and was intended to be legally binding. On the facts, an alleged oral joint venture was not established where the meeting was brief, the solicitor declined to act for both sides and said there was no complete agreement, no contemporaneous notes were produced, and later conduct (including a solicitor's letter seeking confirmation so that 'a formal agreement can be drawn up') was inconsistent with a concluded bargain.
2Outcomes reached in principle at a tribunal mediation, recorded only in solicitors' differing notes described as 'proposed' or 'draft' heads of agreement and with significant matters such as construction costs unresolved, fell within the third [name withheld] v [name withheld] category. The parties did not intend to be bound until a formal deed was executed.
3A party is not bound by draft heads of agreement prepared by the opposing party's solicitor that contain terms not reflected in either side's notes of the mediation, such as caps on recoupable costs, where the draft was expressly rejected. On the facts, any breach would have attracted only nominal damages because the development contemplated by the original approval was not shown to be feasible or profitable.
